Some loyal readers have suggested that I get off this case … That I’ve made my point.

I promise that I’ll stop writing about BLS reporting bias when the streak ends.

Now we’re up to 77 out of 78 weeks — and, at least 18 weeks in a row — that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.

Based on yesterday’s BLS report, the number for the week ending August 25 was revised upward from 374,000 to 377,000.

Nonfarm private payrolls hit a post-recession low of 106.8 million January 2010 … The figure currently stands at 111.3 million as of July.

While that is indeed a gain of 4.5 million, it’s only a net gain of 300,000 over the course of the Obama administration to date since the private jobs figure stood at 111 million in January 2009, the month Obama took office.

And total nonfarm payrolls, including government workers, are down from 133.6 million workers at the beginning of 2009 to 133.2 million in July 2012. There’s been a net loss of nearly 1 million public-sector jobs since Obama took office, despite a surge in temporary hiring for the 2010 census.

Meanwhile, the jobs that have come back aren’t the same ones that were lost.

According to a study released last week by the liberal-leaning National Employment Law Project, low-wage fields such as retail sales and food service are adding jobs nearly three times as fast as higher-paid occupations.

Now we’re up to 76 out of 77 weeks — and, at least 17 weeks in a row — that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.

Based on yesterday’s BLS report, the number for the week ending August 17 was revised upward from 372,000 to 374,000.

In itself, the 2,000 isn’t a big deal.

But, in context it is

Again, I ask: statistical bias or political bias?

If the former: fix it already, BLS.

Hint to BLS: just add 2k or .8% to your prelim forecast !

* * * * *

Almost forgot … the preliminary unemployment claims for the week of Aug. 25 are reported even vs. the Aug. 11 preliminary number and up 2K vs the revised Aug. 18 number.

Answer: Starting salaries tend to drop & to 8 percentage points for each percentage point increase in the unemployment rate … and it can take up to 15 years to get back to “normal” levels.

Lisa Kahn, a Yale School of Management economist analyzed government data during and after the deep 1980s recession.

She found that for each percentage-point increase in the unemployment rate, those with the misfortune to graduate during the recession earned 7% to 8% less in their first year out than comparable workers who graduated in better times.

The effect persisted over many years, with recession-era grads earning 4% to 5% less by their 12th year out of college, and 2% less by their 18th year out.

For example, a man who graduated in December 1982 when unemployment was at 10.8% made, on average, 23% less his first year out of college and 6.6% less 18 years out than one who graduated in May 1981 when the unemployment rate was 7.5%.

For a typical worker, that would mean earning $100,000 less over the 18-year period.

Still again …

Now we’re up to 75 out of 76 weeks — and, at least 16 weeks in a row — that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.

Based on last Thursday’s BLS report, the number for the week ending August 17 was revised upward from 366,000 to 368,000.

In itself, the 2,000 isn’t a big deal.

But, in context it is

Again, I ask: statistical bias or political bias?

If the former: fix it already, BLS.

Hint to BLS: just add 2k or .8% to your prelim forecast !

* * * * *

Almost forgot … the preliminary unemployment claims for the week of Aug. 18 are up 6K vs. the Aug. 11 preliminary number and up 4K vs the revised Aug. 11 number.

Now we’re up to 73 out of 74 weeks — and, at least 14 weeks in a row — that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.

Based on Thursday’s BLS report, the number for the week ending July 28 was revised upward from 365,000 to 367,000.

In itself, the 2,000 isn’t a big deal.

But, in context it is

Again, I ask: statistical bias or political bias?

If the former: fix it already, BLS.

Hint to BLS: just add 2k or .8% to your prelim forecast !

* * * * *

Almost forgot …

The 4-week moving average of initial unemployment claims bumped up 2,250 to 368,250 … suggesting that the corner hasn’t been turned yet.

There are a lot of of confusing – and sometimes misleading – numbers thrown around to characterize the state of the employment market.

As we’ve been harping the past several weeks, the BLS has been consistently underreporting the weekly unemployment claims numbers that get headlined on the news – only to revise them up quietly the following week.

Similarly, there are lots of questions about the BLS’ seasonal adjustment factors … which sometimes cause more variance than they explain.

Finally, there’s understandable confusion about the reported unemployment rate and the labor force participation rate. Since the latter has been going down, the former benefits – i.e. there are fewer unemployed people because some (or many) have left the work force.

The St. Louis Fed published a chart that puts the factors into perspective.

The chart is brilliant in its simplicity.

It simply plots the percentage of the able-bodied population who are employed. The difference to 100% is the percentage of able bodies that either choose not to work or can’t find jobs.

What it shows: prior to the financial crisis, about 63% of able bodies had jobs.

The rate fell quickly to about 58.5% and has – save for some statistical noise – hasn’t budged despite the trillions of fiscal and monetary action.

In other words, about 1 in 20 (the difference between 63% and 58.5%) able bodied folks who used to work, aren’t employed now … and the trend isn’t good.

More workers joined the federal government’s disability program in June than got new jobs..

The economy created just 80,000 jobs in June … also during June, 85,000 workers left the workforce entirely to enroll in the Social Security Disability Insurance program.

While the economy has created 2.6 million jobs since June 2009, 3.1 million workers signed up for disability benefits.

In other words, the number of new disability enrollees has climbed 19% faster than the number of jobs created during the sluggish recovery … even after accounting for people who left the disability program because they died or aged into retirement.

In

Also in June, almost 275,000 put in applications for disability benefits.

Experts say that more people try to get on disability when jobs are scarce.

You think ?

My question: given the ever tightening OHSA regs, how could the workplace have gotten so dangerous?

When the Bureau of Labor Statistics announced the nation’s latest national employment last week, the Obama administration stressed that people should not “read too much” into the data.

Mitt Romney’s campaign pounced, and flagged the fact that the White House has repeated that same line nearly every month since November 2009.

See below for the roundup of articles from WhiteHouse.gov that Romney’s campaign posted on its site. In many of the posts, the authors for the administration do acknowledge that they repeat themselves:

June 2012: “Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.”

May 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.”

April 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.”

March 2012: “Therefore, it is important not to read too much into any one monthly report, and it is helpful to consider each report in the context of other data that are becoming available.” (LINK:)

February 2012: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.”

January 2012: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.”

December 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

November 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

October 2011: “The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. There is no better example than August’s jobs figure, which was initially reported at zero and in the latest revision increased to 104,000. This illustrates why the Administration always stresses it is important not to read too much into any one monthly report.”

September 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

August 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

July 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

June 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

May 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

April 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

March 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

February 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

January 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

December 2010: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

November 2010: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.”

October 2010: “Given the volatility in monthly employment and unemployment data, it is important not to read too much into any one monthly report.”

September 2010: “Given the volatility in the monthly employment and unemployment data, it is important not to read too much into any one monthly report.”

July 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative. It is essential that we continue our efforts to move in the right direction and replace job losses with robust job gains.”

August 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”

June 2010: “As always, it is important not to read too much into any one monthly report, positive or negative.”

May 2010: “As always, it is important not to read too much into any one monthly report, positive or negative.”

April 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”

March 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”

January 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”

November 2009: “Therefore, it is important not to read too much into any one monthly report, positive or negative.”

In other words, it’s important not to read too much into the Obama administration’s past 3-1/2 years of performance.

The chickens came home to roost last Friday when the BLS had to gulp and (1) revise downward March and April jobs data, and (2) boost their count participants to the job market — the statistical aberration that was making the unemployment rate look like it was going down

Last Friday’s dismal jobs report shouldn’t have been much of a surprise to loyal readers. As we’ve said often, CEOs are dismayed by Team Obama’s economic, regulatory and pro-union policies and won’t do any serious hiring while Obama is in power. Period.

Given the Administration’s anti-corporate rhetoric, actions, and proposed game-changing rules, I doubt that many CEOs will be taking on added costs and risks to boost the administration.

More likely, they will let unemployment continue to creep along, and will slow roll the process of rehiring.

Corporate chieftains will sit back and watch the President squirm and spin his “4 million jobs – saved or created”. As Rev. Wright would say “the chickens will have come home to roost”. Passively aggressive resistance at its very best.

Unfortunately, that means we’ll be seeing high unemployment for some time – at least through the 2012 Presidential elections.

Over the next 40 years, it bumped up about a point a year, hitting 60% in 2000.

The demographics are well known. More women chose to pursue careers and some families needed 2-wage earners in the family in order to make financial ends meet.

* * * * *The Shorter View

But, the long view masks what’s been happening the past couple of years.

Let’s shorten the time frame back to only 1990, and increase the granularity of the charting scale.

During the Clinton Era, women’s labor force participation rates continued to climb at the historical rate and reached a historical peak a bit above 60%

The participation rate fell back slightly during the eight Bush years … from 60% to about 59.5%

During the 3+ years since Obama’s inauguration, the women’s labor force participation rate dropped 2 points from 59.5 to 57.5%

Hmmm.

* * * * *

So, what’s going on?

Pundits are serving up a few explanations:

1. The labor market has absorbed the historically pent up supply of women wanting to work and able to find jobs.

2. Some women have discovered what many me have know for centuries – work often isn’t as fulfilling and rewarding as it’s made out to be.

3. Some women have done the math and figured out that compensation levels are sometimes inadequate to fully cover the costs of work clothes, commuting, child care, etc.

4. As government benefits have increased, some women at the lower rungs of the economic ladder have concluded that they’re better off not employed than to take a low paying job.

Regarding the last pint, according to the WSJ, in some high-benefit states women need to earn $30,000 or more to compensate for the benefits they lose if they get a job.

Considering that a full-time minimum wage job only pays about $20,000 [ 2,000 hours times $10} … at least part of the explanation for declining labor force participation rates may be purely rational economics …

Fat builds in all organizations over time. In “normal” times, it’s difficult to get rid of dead wood. Employment laws – perhaps well-intended originally –- serve to protect slackers by making it cumbersome and difficult to fire anybody.

When the economic tide rolls out, companies have the air cover they need to resize and purge under-performers en masse.

The tendency is to cut deep. If some muscle gets pared too, so be it. It can be rehabilitated later.

In typical business cycles, employment is a so-called lagging indicator of an economic rebound. That is, when the economy starts to recover, jobs are usually added back very slowly.

Why?

Because businesses have a renewed zeal for productivity, they recommit to keeping the fat from building up again, and they want to be sure that the signs of better economic times aren’t false positives.

Fewer jobs will get added back than history would suggest, and those that get added back will materialize later than past patterns.

Businesses will add jobs as a last resort rather than trying to build capacity ahead of the economic growth curve.

Economists are now saying that the mild winter has artificially inflated job growth.

Translation: The surge in hiring early in the year may not be as strong as it appeared.

The warm weather meant more jobs for construction workers and retail employees.

For economists, it means a statistical nightmare.

Typically, these bumps in demand are evened out through a process called seasonal adjustment.

That allows researchers to compare one month’s economic activity with the next for a more accurate picture of the nation’s health.

But this year’s weather was so abnormal that those models fell short, and economists are now scrambling to figure out how much of the growth over the past three months was simply due to a glitch in their systems.

“When the weather does not follow a normal seasonal pattern, then the seasonal adjustment cannot adjust for it.”

And that may help explain why recent data on jobs have looked rosier than actual economic growth would suggest.

Forecasts for the nation’s gross domestic product during the first quarter hover around 2 percent, a middling number at best.

Somewhere there is a disconnect, and Mother Nature is a valid scapegoat.

The labor market boost from the mild winter will eventually even itself out, though it may mean dips in job growth in coming months

Glad to see the mainstream media catching up with the Homa Files and its loyal readers …

When the Feds release this week’s unemployment data, expect more chatter about the falling labor participation rate … which reflects the increasing number of discouraged people who have stopped looking for work and don’t get counted in the unemployment numbers.

For the 4 years prior to Obama’s inauguration, the labor force participation rate hung pretty steady … at around 66%.

Since Obama took office, that rate has plummeted to 63.7%.

Let’s try some math skills …

If unemployment is 8.3% with a 63.7% labor force participation rate, what would the unemployment rate be if the participation rate were at the pre-Obama 66%?

Answer: about 11.5% …

Obama’s economic hope continues to be that more and more people get discouraged — or, just stay on unemployment for the full 99 weeks.

You may remember that the BLS reported a dramatic drop in the unemployment rate for January — down from 8.5% to 8.3%.

At the time, we (and many other folks) pointed out that the apparent improvement was largely drive by people leaving the work force, by seasonal adjustments (which were more liberal than prior years), and by a revision in the way that the BLS compiles the numbers.

In other words, smelled like some book-cooking going on.

At the time, we encouraged loyal readers to start watching the Gallup daily tracking of the unemployment rate. Historically, it has been a pretty good canary in the unemployment coal mine.

Typically, Gallup’s mid-month number is a good predictor of the BLS’s end-of-month number.

Well, the Gallup number has increased dramatically from mid-January to mid-February … from 8.3% (same as the BLS end of January number) … up to 9%, where it has bee hanging.

The number reported by the BLS for February will be very, very interesting …

A couple of weeks ago – when Team Obama was victory lapping over the unemployment rate dropping to 8.3% – we told readers to watch the Gallup daily unemployment surveys as a harbinger of things to come.

Gallup has been saying that the employment numbers in the end of January seemed to be weakening.

Guess what?

After reaching a low of 8.2% in mid-January – consistent with gov’t reporting — the rate has crept back up to 9%.

Earlier this week,we blogged about the “interesting” difference between Team O’s job gain claim:

The Labor Department reported that the economy gained 243,000 jobs.

But, the BLS also reported that the economy lost 2,689,000 jobs in the month

The difference in the two numbers is in seasonal adjustment.

Here’s an interesting tidbit that I haven’t seen reported: the January seasonal adjustment factor mysteriously crept up from the factor that was used in January 2011 … with the effect of increasing the number of seasonally adjusted jobs reported.

The Feds reported 243,000 new jobs in January … driving the unemployment rate down to 8.3%

Clear evidence that we’re on a roll, right?

Not so fast.

First, numerous sources have pointed out that another 1.2 million people got discouraged and stopped looking for work. They’re no longer counted as unemployed.

Second, as it does every year, the government revised its statistical methodology for the January report. The BLS footnotes say “As a result, household survey data for January 2012 will not be directly comparable with that for December 2011 or earlier periods.”

Pundits have been saying that Obama will be ok with a high unemployment rate in 2012 as long as the trajectory is in the right direction. That is, that unemployment is coming down.

Here’s my scenario: unemployment will creep back up and Obama will be facing a high unemployment rate that is rising.

That’s not good for the O-team.

Politically, Obama might have been better off if the rate had stayed closer to 9% for a while … he may be in the awkward position of having a high unemployment rate that’s going in the wrong direction.

For the last year or so, though, the economy has stubbornly failed to cooperate, and pundits began to acclimate themselves to the assumption that President Obama was highly vulnerable, if not a dead man walking.

A few months ago, that scenario was looking almost certain.

Now it’s looking far less likely.

Oh really? 8.5% unemployement is a good thing?

I guess the logic is that extrapolating the the November to December change, we’ll be back to full employment in in about 5 years.

Maybe faster if more people can be encoraged (or is it discouraged?) enough to leave the work force?

But, let’s not quibble over the numbers.

The question is: will December’s 8.5% help or hurt President Obama’s re-election campaign.

Short-run, the President should get an approval bump from the unemployment rate headlines. That’s fair.

But, the new lower number may be an albatross in 2012.

Here’s why.

Still, much of the rate drop is attributable to folks who are unemployed and stopped looking for a job because either (1) they had holiday shopping to do (2) didn’t want to work as a retail clerk or FedEx warehouse grunt (3) like the idea of 99 weeks of unemployment checks, or (4) have flat out given up because the economy sucks so bad.

My view: the road to economic success is is not paved with people giving up hope and couch-sitting instead of job-hunting.

The unemployment rate is likely to move back up in 2012 because, historically, as the economy appears to be bouncing back, unemployed folks who aren’t looking for work re-enter the job market and start looking again. In other words, the unemployment rate may creep up because the denominator is getting bigger.

So, even if a modest recovery is taking place – something I don’t personally believe to be true – the labor market dynamics work against the President.

Pundits have been saying that Obama will be ok with a high unemployment rate in 2012 as long as the trajectory is in the right direction. That is, that unemployment is coming down.

Here’s my scenario, unemployment will creep back up and Obama will be facing a high unemployment rate that is rising.

That’s not good for the O-team.

Further, if Obama chest-pounds the 8.5% now, Congress has less pressure to “pass it now.” So, he may get less of his jobs bill through.

Politically, Obama might have been better off if the rate had stayed closer to 9% … he may be in the awkward position of having a high unemployment rate that’s going in the wrong direction.

Job growth has been around 100,000 per month for the past couple of months.

But, until November, the unemployment rate has been stuck at 9%.

Hmmm.

Most folks argue that 100,000 to 200,000 is what’s required to handle population growth — the new workers entering the market.

But, in November, 125,000 new jobs pushed the unemployment rate down by .4% – which is huge.

Couple of reasons.

There are different surveys used to calculate job growth and unemployment rates. It could be that one of the surveys is whacky … either there were more jobs added than reported, or unemployment is under-reported.

The jobs numbers for the immediately prior months were revised upward. That means that unemployment may have been over-estimated … that the rate really is 8.6% now, but it’s a drop from, say, 8.8% … not 9%

Most important, about half of the apparent drop in the unemployment is attributable to folks dropping out of the workforce … people who are unemployed but have stopped even looking for new employment.

My bet is that the jobs number is right and that the unemployment rate didn’t really fall by .4% … maybe it fell by one or two tenths of a percent … but not close to 1/2 percent. My eye is on the jobs number.

OK, let’s not quibble over the numbers.

The question is: will November’s 8.6% help or hurt President Obama’s re-election campaign.

Short-run, the President should get an approval bump from the unemployment rate headlines. That’s fair.

But, the new lower number may be an albatross in 2012.

Here’s why.

The unemployment rate is likely to move back up because, historically, as the economy appears to be bouncing back, unemployed folks who aren’t looking for work re-enter the job market and start looking again. In other words, the unemployment rate may creep up because the denominator is getting bigger.

So, even if a modest recovery is taking place – something I don’t believe to be true – the labor market dynamics work against the President.

Pundits have been saying that Obama will be ok with a high unemployment rate in 2012 as long as the trajectory is in the right direction. That is, that unemployment is coming down.

Here’s my scenario, unemployment will creep back up and Obama will be facing a high unemployment rate that is rising. That’s not good.

Further, if Obama chest-pounds the 8.6% now, Congress has less pressure to “pass it now.” So, he may get less of his jobs bill through.

Politically, Obama might have been better off if the rate had stayed closer to 9% … he may be in the awkward position of having a high unemployment rate that’s going in the wrong direction.

Obama’s jobs plan has a smorgasbord of hiring incentives … all of which are 1-time credits (e.g. for hiring veterans) or 1-year tax incentives (e.g. eliminating half of employers’ FICA match).

Corp execs’ statements that they don’t hire based on 1-year incentives keep falling on deaf ears, and the Administration keeps serving them up.

Let’s look at a specific and do some simple arithmetic.

According to the Administration’s fact sheet on the Jobs Bill, the lead provision of the bill (about 15% of the $450 billion cost) is a payroll tax cut for businesses.

The President’s plan will extend the payroll tax cut to firms by cutting in half their payroll tax on the first $5 million in payroll. Next year, instead of paying 6.2 percent on their payroll expenses, firms would pay only 3.1 percent.

For example, a firm with 50 workers earning an average of $50,000 a year – for a total payroll of $2.5 million – would receive a payroll tax cut of 3.1% of its total payroll, or about $80,000 – $1,500 per average employee.

By intent, the cut doesn’t do much for big businesses. The maximum benefit that could go to a big company is only $155,000 ($5 million times 3.1%). That’s rounding rounding error – equivalent to maybe 2 “free” hires for 1 year.

Hardly a game changer.

So let’s look at a small business.

At the margin, continuing the fact sheet’s example, a new average employee’s base salary cost is $50,000. Fringes (e.g. health insurance) add on another $10,000. Payroll taxes (pre-credits) adds on another $3,000 … bringing the total to $63,000.

But, companies don’t hire people for 1-year. Once they’re added to the payroll, they stay there for awhile.

How long?

Well, the BLS says that the median tenure of employees is about 4.5 years … with almost 1/3 employees having been on payrolls for more than 10 years.

Let’s take the low number, 4.5 years.

When a company hires an employee, it is implicitly making a commitment of at least $285,000 ($63,000 times 4.5 years).

The Obama plan offsets the cost with $1,500 … a whopping 1/2 of 1%.

Does anybody really believe that will stimulate companies to hire in uncertain times?

Last week, Speaker Boehner spoke about the Obama’s Jobs Plan and the state of the economy”

House Speaker John Boehner said President Barack Obama’s jobs plan would do little to get the economy moving again because “job creators in America are basically on strike.” Source

Well, we told so … going back to a July 2009 post titled: “Why private sector jobs won’t be coming back any time soon … hint: it’s called passive aggressive resistance.”

Back then, we were saying:

The bottom line: businesses will resist government policies passive aggressively.

Fewer jobs will get added back than history would suggest, and those that get added back will materialize later than past patterns. Businesses will add jobs as a last resort rather than trying to build capacity ahead of the economic growth curve.

Why should companies increase their costs and risks any more than is absolutely necessary ?

Companies will continue to off-shore jobs, but will be more clever and clandestine about it, e.g. by vertically disintegrating and simply buying goods and services from 3rd parties.

Given the Administration’s anti-corporate rhetoric, actions, and proposed game-changing rules, I doubt that many CEOs will be taking on added costs and risks to boost the administration.

More likely, they will let unemployment continue to creep up, and will slow roll the process of rehiring.

Corporate chieftains will sit back and watch the President squirm and spin his “4 million jobs – saved or created”.